Tuesday, 1 December 2009

Taxing times

With all the discussion about the scale of the economic challenges ahead, there has been much debate about how cuts in public spending are going to occur and how taxes are going to have to be raised. I have commented on the former previously, and as debate on Stephanie Flanders' blog has gradually turned to the subject of taxes, I also posted the following:

"IMHO we need to immediately introduce 2 taxes:

1. Land Value Tax (which is NOT a Property tax) - this taxes the ultra-rich land-owners, who gain wealth as a consequence of what we put around that land. They cannot avoid it and they cannot pass it on (law of natural economics). This could then be used to subside tax reductions to the hard-working (e.g. through tax threshold increases, and basic rate of tax reductions). Take a look at http://www.urbantools.org for instance and this post for instance.

2. Gambling Tax - high percentage level of tax applied to investment banking, trading, hedge funds etc. This tax would at least create some value to society from such socially useless (and arguably morally corrupt) activities. It would also make profiteering from gambling much harder, and focus more attention on trying to create real wealth instead. See this post for instance.

These will deter profiteering from gambling as well as profiteering by simply owning land (whilst adding no value at all)"

In response a fellow blogger subsequently added ...

"I agree - why not tax land ownership more and useful and productive labour less? ... If the Lib Dems want real radical tax reform for a fairer system why not borrow some of James Robertson's ideas on shifting the tax burden onto land ownership and use of common resources?"

... and I would certainly recommend taking a look at James Robertson's web-site (nb it has a permanent link from this blog). Another blogger (ishkandar) also commented on the idea of gambling taxes:

"Gambling Tax ... Interesting !! Hong Kong has a gambling tax. On a 6% betting tax, the Hong Kong Jockey Club produces sufficient tax revenue to fund about 60-70% of the HK government expenditure, year after year after year !! Then again, the Chinese are well known to be inveterate gamblers !! ... As for casino banking and related activities, all they need is to be properly regulated and taxed !!"

To which I replied:

"Thanks for the insight about the effectiveness of gambling taxes in Hong Kong - interesting indeed ... Hong Kong also appears to be keen on Land Value Tax too ... funny how leading nations do, whilst those in the west don't even look. IMHO casino banking does need to properly regulated, but it needs to be taxed more than normal gambling too (e.g. to pay back taxpayers for previous bailouts)."

PS A few bloggers took me by surprise recently by 'putting me forward' for Prime Minister, and then starting to form a cabinet ... whilst posting about the moral values, or more specifically the lack of moral values apparent today, which others then commented upon. I struggled with the former (my attempted response is here), but I was able to comment a lot more on latter (1,2)!